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Uranium producer (NYSE:UUUU) () is acquiring Uranerz Energy (NYSE:URZ TSE:URZ) in an all-stock deal valued at roughly US$150 million creating one of the largest uranium companies in the U.S. and diversifying its asset base.
said the deal will build the only integrated conventional and in-situ recovery (ISR) uranium mining company focused solely on the U.S. and will have a combined NI 43-101 resource base that will be the largest in the country among producers and near producers.
The two companies believe that the newly formed entity will be well positioned in terms of size and scale as a key uranium supplier to the U.S. nuclear energy industry. It is also expected to result in significant cost savings and synergies.
“ has already established itself as a leading producer of uranium in the U.S. and the premier consolidator of U.S.-based uranium assets" said president and chief executive officer Stephen Antony.
"By adding Uranerz to our corporate umbrella we are creating a multi-source uranium production platform that is better positioned to respond to the dynamic and volatile nature of the uranium market."
Uranium prices have been depressed ever since the nuclear disaster in Japan in 2011 but spot prices have been on the rise recently as new reactors in Europe the Middle East and Asia are setting up a far greater longer-term supply-demand imbalance.
operates the only conventional uranium mill in the US at White Mesa in Utah and has managed to keep its head above water since 2011 by engaging in a cash conservation strategy which includes non-core asset sales and producing just enough uranium to fulfill its long term contracts. Its goal has been to position itself to increase production easily should market conditions improve over an extended time frame.
Uranerz uses a process known as in-situ recovery (ISR) in which a leaching solution extracts uranium from sandstone uranium deposits in the Powder River Basin area of Wyoming. It is the newest uranium producer in the country.
"Wyoming has been an area of focus for and the Uranerz team has done an exceptional job of exploring permitting building and operating their Nichols Ranch project in Wyoming" said ' Antony.
"I look forward to working with them to build a lasting and robust ISR mining business within .”
The transaction will also see benefit from a deep development pipeline of projects with the ability to significantly scale up production in the coming years as uranium prices increase.
The US is currently the largest consumer of uranium globally with 100 nuclear reactors in operation and five under construction yet it is now heavily reliant on imported uranium to fuel its reactor fleet. is the second largest supplier of uranium in the US and accounts for about 20 percent of US uranium production.
Under the terms of the deal Uranerz shareholders will get 0.255 common shares of worth $1.57 at Friday's closing price for each share of Uranerz held representing a premium of 37 percent to Uranerz's closing price on Friday.
The deal which still requires shareholder and regulatory approvals is expected to close by the summer and includes a $5 million break-up fee.
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